Does Voya Financial Stock deserve a place in your portfolio?

Voya Financial Pension, Investment and Insurance Company, Inc. (VOYA), which is based in New York, operates through three segments: Retirement; Investment management; and social benefits. The company has an ISS Governance QualityScore of 2, indicating a relatively low governance risk.

On December 21, the S&P Dow Jones Indices announced that VOYA will be added to the S&P 500 Midcap 400 Index before the market opens on December 28, 2021.

The stock has gained 8.7% since this news broke to close yesterday’s trading session at $ 66.46.

Here is what could shape VOYA’s performance in the short term:

Ambitious financial goals

VOYA aims to achieve an adjusted EPS growth rate of 12-17% per year through 2024. The company plans to fuel its bottom line growth through expanding margins, capital management and growth in profitability. net income. It plans to achieve a 90-100% free cash flow conversion over the next three years and achieve an operating ROE in the range of 14-16%.

In this regard, VOYA President and CEO Rodney O. Martin, Jr. said: “Our significant financial, operational and cultural transformation has enabled Voya to become a company focused on health, wealth and investment. , clearly focused on service to the workplace and institutions. . Voya is now poised to drive further success by providing valuable solutions focused on the growing needs of our clients and clients. “

Mixed growth prospects

Analysts expect VOYA’s revenue to increase slightly in the current quarter (end of December 2021) and 2.5% in the next quarter, but to decline 1.8% next year. However, consensus estimates of EPS show a drop of 24.7% in the current quarter, a fall of 17.6% in the following quarter, and a decline of 15.9% in 2022.

Lower rating than industry

In terms of a non-GAAP forward P / E, VOYA is currently trading at 0.37x, 26.3% lower than the industry average of 11.35x. The stock’s non-GAAP PEG forward multiple of 0.29 is 71.5% lower than the industry average of 1.03.

Additionally, VOYA and EV’s forward price / sales ratios of 1.15 and 1.94, respectively, compare to industry averages of 3.39 and 2.88. In addition, the stock’s forward EV / EBIT multiple of 9.43 is 20.2% lower than the industry average of 11.81.

Consensus rating and price target indicate upside potential

Of the five Wall Street analysts who rated VOYA, four rated it Buy while one rated it Hold. The median 12-month price target of $ 77.20 indicates a 16.2% upside potential from yesterday’s closing price of $ 66.46. Price targets range from a low of $ 75.00 to a high of $ 79.00.

POWR ratings reflect uncertainty

VOYA has an overall rating of C, which equates to Neutral in our property POWR odds system. POWR scores are calculated by considering 118 separate factors, each factor being weighted to an optimal degree.

VOYA has a C rating for growth and quality. The company’s revenues have declined at a rate of 19.1% per year for the past three years. However, its EBITDA grew at a CAGR of 46.6% over this period, justifying the growth note. Additionally, VOYA’s 12-month rolling 12-month net profit margin is 46.8% above the industry average of 29.95%. However, the last 12 months of the company leveraged free cash flow the margin is negative, which is in line with the level of quality.

Of the 53 C-rated stocks Asset Management industry, VOYA is ranked # 47.

In addition to the ratings I highlighted, check out the VOYA ratings for momentum, sentiment, stability and value. here.

Final result

Rising employment rates and wages against the backdrop of the global economic recovery will likely stimulate demand for VOYA’s service offerings in the coming months. Analysts expect the company’s revenue to increase over the next year. However, the company’s low cash flow is a cause for concern. In the past 12 months, VOYA’s net revenues were $ 4.50 billion, while its net operating cash flow was $ 353 million. In addition, the company’s leveraged free cash outflow was $ 3.52 billion. Against this backdrop, we believe investors should wait until VOYA’s cash flow improves before investing in the stock.

How does Voya Financial, Inc. (VOYA) compare to its peers?

Although VOYA has a C rating in our proprietary rating system, one might consider looking at its industry peers, Silvercrest Asset Management Group Inc. (SAMG), Gamco Investors, Inc. (GBL) and Diamond Hill Investment Group, Inc. (DHIL), which have an A rating (strong buy).

VOYA stock was trading at $ 66.70 per share on Thursday morning, up $ 0.24 (+ 0.36%). Year-to-date, VOYA has gained 14.65%, compared to 29.78% for the benchmark S&P 500 during the same period.

About the Author: Aditi Ganguly

Aditi is a seasoned content developer and financial writer who is passionate about helping investors understand the dos and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach to stock analysis. Following…

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